Wednesday, March 23, 2011

The Real Marcellus Shale Jobs Boom

Perhaps you've read the good news. From January 2010 to January 2011, Pittsburgh added the 6th most jobs. That's out of 372 metros. The top 10:

  1. Dallas-Fort Worth-Arlington
  2. Houston-Sugar Land-Baytown
  3. Chicago-Joliet-Naperville
  4. Washington-Arlington-Alexandria
  5. New York-Northern New Jersey-Long Island
  6. Pittsburgh
  7. Orlando-Kissimmee-Sanford
  8. Detroit-Warren-Livonia
  9. San Diego-Carlsbad-San Marcos
  10. Boston-Cambridge-Quincy

But that's the tip of the job growth iceberg. Wait until you see what is in the pipeline:

The Gulf Coast’s petrochemical industry is benefiting from the recent boom in U.S. natural gas supplies, which has lowered feedstock costs and improved odds that the region will get new plants and jobs in coming years, an economist for a leading industry group said Tuesday in Houston.

Capital investment is now being reconsidered,” said Kevin Swift, chief economist with the American Chemistry Council. “Ten years ago, it was largely being written off.” ...

... Chemical makers including Bayer, Chevron Phillips and Eastman Chemical Co. have said recently they may put mothballed U.S. production units back into service because of low ethane costs. Nova Chemicals Corp. has even proposed building a new ethane cracking unit in West Virginia.

Houston is the focus of this petrochemical renaissance. The rosy picture painted there applies to Pittsburgh, as well. Look to Sarnia, Ontario to understand what the Marcellus Shale portends for Southwestern Pennsylvania. I blogged about that region over a year ago concerning a Nova Chemicals Corp. proposed pipeline from Pittsburgh to Western Ontario.

While the Gulf Coast petrochemical industry waned, it boomed in Sarnia thanks to ample fuel supply in Alberta (Check out the Canadian pipeline maps here). Instead of exporting shale gas to Sarnia, why not locate production over the Marcellus Shale? I think employers such as Bayer is where you will see the most job growth thanks to shale gas.

When it comes to the the technology and infrastructure behind the transfer of those YouTube videos from data centre to laptop, what should be noted is how in some ways new social media is supported by older and simpler technologies. Yahoo's newest cloud computing centre in upstate New York, for example, was designed with a nod to old factories that once dotted the landscape around Buffalo and other rust belt cities. Those designs took advantage of cool and frequent winds from Lake Erie that prompted architects to place heat sources in the centre of buildings, where they behaved as a natural pump that moved air up and out of rooftop vents while they drew cool air out of the same buildings' sides. Such a design tackles one issue that flummoxed data centre managers while irritating these same facilities' critics: data centres often spend the bulk of their budgets on cooling systems because engineers were fearful that excessive heat would prompt these large systems to run ineffectively. Research has shown, however, that allowing outside air to cool a data centre can significantly reduce their energy consumption while slashing costs.

Location also has played a huge role in where in-house data and cloud computing centres were placed. The cost of land and electricity has often been a determining factor for a new build-out, but as companies became more conscious of their carbon footprint, they realised that operating a centre off of coal-generated electricity was not the strongest tactic to endear stakeholders. Regions with cooler climates or greener sources of energy have the opportunity to attract these centers and the jobs that come with them. The state of Washington has taken notice: the home of Microsoft and many tech companies gives tax breaks to data centres built in a central county that derives most of its energy from hydropower and even wind. The duo of technology and strategically-placed computing centres will ameliorate the impacts that our dependence on bits and bytes has on the planet.

The Rust Belt has cheap land and the cool air, but lacked inexpensive power. The shale gas revolution is the last piece of the puzzle. Cornell University recently switched from coal to gas for electricity generation. A similar kind of retrofitting could make the Eastern Great Lakes a hotbed of data centers. Again, I see Pittsburgh as the likely center for such economic development.

I'm sure there are other shale gas spinoffs I'm overlooking. All will help to make Pittsburgh a prime destination for talent.


Unknown said...

Marcellus Shale will be the downfall of any region that embraces fracking technology. It surprises me how you embrace it so. You're all about job growth, you think the best thing for the Pittsburgh area would be for it to turn into the next Dallas - Ft. Worth. What do you care about the environment? The quality of life of the underclass that have to support this crap (mining)? You are promoting the demise of the same region you're trying to trumpet.

Anonymous said...

I also question the amount of jobs that are being created. Are there any real numbers on the amount of jobs created? I look at the websites for companies in the area and there aren't 100s of jobs being offered from companies operating in the area like so many news stories report. Aren't they just brining in people from Oklahoma and Texas?

Jim Russell said...

I haven't seen anything that could be characterized as "real numbers". I'll have more to say about this in a post coming soon. Thus far, the bulk of the labor is being flown in from elsewhere. However, I have noticed some indication that local job creation from shale gas is picking up.